"When it's all said and done it may take several years to recover the lost output and envision the peak levels of 2006-2007," Luc Jobin, chief financial officer of Montreal-based Canadian National Railway (TSX:CNR), said Tuesday

Prospects for consumer spending will improve but could be dampened by high levels of debt and unemployment, Jobin told the CIBC Eastern Institutional Investor Conference.

Fred Green, president and CEO of Calgary-based Canadian Pacific Railway (TSX:CP), said grain shipments have been stronger and potash could rebound but other sectors of its business haven't.

"I don't mean to depress anybody, but I am just saying activity levels that we are seeing are modest," Green told the conference.

He also said container shipments of retail goods will be "soft" for the rest of the year and possibly into early next year.

Calgary-based CP Rail still has 2,000 people laid off and Green said some employees will be brought back to do locomotive maintenance and to be on standby should potash shipments pick up.

Jobin said Canadian National, which has major operations across Canada and into the United States, had about 650 people out of work. As well, 20 per cent of its cars and locomotives were parked at the end of the second quarter as the company scaled back in response to the recession's impact on its business.

Green said the auto business has been "brutal" and shipments of forest products have been affected by a housing slowdown in the United States.